Mark J. Swerdlin

As you may remember, Shawe Rosenthal joined with other law firms in Worklaw® Network in a lawsuit against the U.S. Department of Labor to block its implementation of the controversial “persuader rule” in order to protect your right to seek counsel on employment, labor and HR matters with privacy and confidentiality. Here’s a brief recap of the milestones: Continue Reading Persuader Rule Lawsuit Update

Today, December 1, 2016, the Department of Labor issued a press release announcing that it had filed an appeal to the U.S. Court of Appeals for the 5th Circuit of the emergency nationwide injunction of the new overtime rule, which had been granted last week by Judge Amos Mazzant, as discussed in our November 23 blog, “Overtime Rule Will Not Take Effect on December 1.” The preliminary injunction temporarily blocked the DOL’s new rule raising the required minimum salary level for the Fair Labor Standards Act’s white-collar exemptions from the requirement to pay overtime pay. The rule was set to go into effect on December 1st.

As discussed in our May 18, 2016 E-lert, in order to be exempt from overtime, a white-collar employee must meet three tests: (1) the salary basis test – the employee must be paid on a salary basis, not subject to reductions for fluctuations in quantity or quality of work; (2) the salary level test – the employee’s salary must currently be at least $455 per week (equaling $23,660 per year); and (3) a duties test – the employee must perform certain duties specific to the executive, administrative or professional exemption in question. There is also a highly-compensated employee exemption under which an employee must currently make at least $100,000 per year and perform at least one exempt duty.

The DOL’s revised rule would have doubled the salary requirement for white collar (executive, administrative and professional) employees from $23,660 per year ($455 per week) to $47,476 per year ($913 per week). The required minimum salary for the highly compensated employees’ exemption would also have been raised from $100,000 to $134,004. These salary levels would have been subject to automatic adjustments every three years. The new rule did not change the duties test for any of the exemptions.

The new rule was challenged by 21 states and multiple business groups, arguing that such change was unlawful. In issuing the preliminary injunction, the judge agreed, noting that the rule change “creates essentially a de facto salary-only test,” which Congress had not intended. In the press release, however, the DOL stated, “The Department’s Overtime Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule.”

This week, the United States Citizenship and Immigration Services (USCIS) published an updated I-9 Form on its website, which can be accessed here.

The Immigration Reform and Control Act prohibits employers from hiring people without first identifying their identity and employment authorization. The I-9 Form is the mechanism to achieve that. Employers are required to complete the I-9 Form within three days of the first day of work for all new hires.

By January 22, 2017, all employers will need to be using the revised form for all new hires. Until then, employers can either continue to use the current version, which is dated 03/08/2013, or they can use the new version. The version date is located at the bottom left corner of the form.

Imagine this: Your company has policies in your employee handbook determined to be unlawful by the NLRB. Then, you and the NLRB engage in a line-by-line revision of the policies to ensure compliance with Board law and thereafter you issue a new handbook, with policies approved by the Board, to your employees. Everything is ok, right? Wrong! This is exactly what occurred in Boch Imports, Inc. v. National Labor Relations Board. In affirming the NLRB, the First Circuit determined that the Employer failed to properly repudiate its prior, unlawful handbook policies even though it revised those policies in collaboration with the NLRB Regional Office. Continue Reading Must Employers Repudiate Unlawful Handbook Policies?

“I’ve known Bob Rumson for years and I’ve been operating under the assumption that the reason Bob devotes so much time to shouting at the rain was that he simply didn’t get it. Well, I was wrong. Bob’s problem isn’t that he doesn’t get it. Bob’s problem is that he can’t sell it.”

President Andrew Shepherd (played by Michael Douglas) in The American President.

The NLRB’s Quickie Election Rule just celebrated its first anniversary and you know what? The union election win rate remained the same–about 65%. The total number of union petitions filed to hold elections jumped all the way from 2,141 in the year before the new Rule up to 2,144 last year– a “whopping” gain of 3 elections. NLRB statistics do confirm that the median time from the filing a petition to the election decreased substantially, from 38 days down to 24 days. Continue Reading NLRB’s Quickie Election Rule Turns One

On March 23, 2016, the Department of Labor released the long-pending revisions to the “persuader rule,” drastically expanding employers’ disclosure requirements regarding their use of union avoidance consultants, including attorneys as well as HR consultants and media specialists. Our firm, on behalf of Worklaw, an international management-side network of labor and employment firms, will be filing suit to block implementation of the rule.

Under the “persuader rule” in the Labor-Management Reporting Disclosure Act of 1959 (LMRDA), employers are required to file reports and disclose expenditures to the DOL each time they engage a consultant to persuade employees regarding employees’ rights to organize. However, the LMRDA provides an “advice exception,” which had been interpreted for over 50 years to exclude an employer’s discussions with its labor relations consultants – including legal counsel – regarding opposition to a union organizing campaign, as long as the consultants had no direct contact with employees.

Under the new rule, however, the scope of an employer’s reporting obligations under the LMRDA has been substantially expanded, and will include a broad range of activities beyond “direct contact” provided by labor relations consultants – including attorneys. The intent of this one-sided rule is to discourage employers from retaining such consultants, and thereby promote unionization. Continue Reading DOL Issues Persuader Rule

AT&T Connecticut and the Communications Workers of America were embroiled in bitter contract negotiations in 2009. Among other efforts to let the public know about the dispute, employees, many of whom had to go into customers’ homes, began wearing shirts that said “Inmate” on the front with a black box underneath the lettering. The back of the shirt said “Prisoner of AT$T” with several vertical stripes and bars above and below the letters. The shirt did not have the Union’s name on it. AT&T suspended, for one day, over 100 employees who wore the shirt and who regularly interacted with the public.

Board proceedings ensued and an NLRB ALJ decided that AT&T violated the Act by suspending the employees. In 2011, by a 2 – 1 decision, the Board affirmed the ALJ decision. The Board reasoned that the “special circumstances” doctrine allowing employers to restrict employees from wearing buttons or insignias at work “when the company reasonably believes the message may harm its relationship with its customers and its public image” was not applicable because the “prisoner” shirt was not likely to cause fear or alarm among AT&T customers.

Common sense sometimes matters in resolving legal disputes. This case is a good example. AT&T Connecticut banned employees who interact with customers or work in public – including employees who enter customers’ homes – from wearing union shirts that said “Inmate” on the front and “Prisoner of AT$T” on the back. Seems reasonable. No company, at least one that is interested in keeping its customers, presumably wants its employees walking into people’s homes wearing shirts that say “Inmate” and “Prisoner.”

In concluding that the Board’s decision failed to take into account the reasonable and practical conclusion that the message on the shirts was offensive and bound to undermine the company’s relationship with its customers, the Court restated, as it had in a previous case a few years earlier that “the Board’s expertise is surely not at its peak in the realm of employer-customer relations.” Because the Court of Appeals found that the special circumstances exception applied, the one-day suspensions were lawful.

Making the NLRB decision particularly head scratching was that just a few years prior to the events in this case there had been, according to The Hartford Courant, “possibly the most widely publicized crime in the state’s history,” involving a home invasion resulting in the murder of several members of a family.

I’d like to say that it’s a sorry state of affairs that a federal Court of Appeals has to rein in the activity of the NLRB that’s supposed to have expertise in enforcing the statute it’s charged with enforcing, but, of course, this is not the first time the D.C. Court of Appeals has had to step in to do so.

Whether Auto Dealer Service Writers (also called Service Advisors) are exempt from federal and state overtime pay requirements has been an issue for years. The U.S. Department of Labor (“DOL”) has flip-flopped on the issue since the exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles” was written into the Fair Labor Standards Act (“FLSA”) in 1966. The DOL’s latest position was set forth in 2011 when it issued a Final Rule amending the “salesman, partsman, mechanic” exemption that did not include Service Writers employed at a retail dealership as exempt. This was in contradiction to the DOL’s action in 2008, when it issued a Notice of Proposed Rulemaking in which it stated that it considered Service Writers to be exempt.

The Courts have not always agreed with the DOL’s interpretation of this exemption. The U.S. Courts of Appeals for the Fourth Circuit (which includes Maryland, as well as North Carolina, South Carolina, Virginia and West Virginia) and Fifth Circuit (covering Louisiana, Mississippi and Texas), several federal district courts, and the Supreme Court of Montana have found Service Writers exempt. Specifically, the Fourth Circuit in Walton v. Greenbrier Ford, Inc. found that Service Writers are “salesman” because their job is to sell services for cars, and because their role is to help customers receive mechanical work on their cars they are involved in the general business of “servicing automobiles.” The Fifth Circuit in Brennan v. Deel Motors, Inc. found the duties and pay structure of Service Writers to be functionally similar to those of salesman, partsman and mechanics whom the statute expressly exempts.

Just recently, however, the Ninth Circuit, in Navarro v. Encino Motorcars, LLC (March 24, 2015) disagreeing with the Fourth and Fifth Circuits, decided that it was required to defer to the DOL’s interpretation and ruled that an auto dealer’s service advisors did not fall within the FLSA’s “salesman, partsman, mechanic” exemption. Essentially the court said that, while there were good arguments supporting both interpretations of the exemption, where a regulatory agency, like the DOL, has chosen one interpretation, it must defer to that choice. The DOL’s view is the exemption is limited to salesmen who sell vehicles and partsman and mechanics who service vehicles. Service Writers do neither.

What does this mean for auto dealers in Mid-Atlantic? Ultimately this issue may wind its way to the Supreme Court. In the meantime, the Ninth Circuit decision is not controlling on federal district courts outside the Ninth Circuit, like Maryland. That may not be as comforting as it appears on first blush. The Fourth Circuit case was decided in 2004, well before the DOL’s 2011 Final Rule. Given that fact, and the reasoning of a well-regarded court like the Ninth Circuit, it’s entirely possible that the federal court in Maryland or the Fourth Circuit itself could reach a different conclusion than was reached in 2004.

We also note that the DOL is poised to issue proposed regulations that are intended to substantially revise and limit the FLSA white collar exemptions (executive, administrative and professional employees). Once issued, the public will have the opportunity to offer comments on the proposed regulations, and the DOL will then issue final regulations – a process that could take a year or more. Thus, although any impact of these regulations will not be immediate, auto dealers should keep in mind that further changes to service writers’ exemption status may be forthcoming.

FLSA compliance is a tricky area. Wage-hour litigation is a booming industry for plaintiffs’ lawyers. Now may be a good time to revisit your exemption classification decisions in order to stay ahead of current litigation trends.

Absent an injunction issuing in one of the pending cases challenging the National Labor Relations Board’s Final Rule substantially revising its representation case procedures, the rules become effective April 14, 2015. The practical effect is that representation elections will be held in a shorter period of time, which reduces the ability of employers to educate their employees about the impact of unionization. Traditionally, uncontested elections were held within 42 days following the filing of a union petition for election. Although the NLRB has not issued any definitive statement as to the timing of elections under the new Final Rule, all indications are that this 42-day period will be cut almost in half.

This rule has a convoluted history. The NLRB had previously issued a controversial and substantially similar quickie election rule in December 2011. The rule was overturned by a federal court because the Board lacked a quorum at the time it issued the rule, and the Board issued a final rule rescinding the quickie election rule in January 2014. The following month, however, the Board re-issued a proposed quickie election rule. The new Final Rule, which takes effect on Tuesday, April 14, will apply to all representation cases filed on or after that date (pending R-cases will continue to be processed under the prior procedures).

The Final Rule provides as follows:

• Parties may now file or transmit documents electronically, rather than by using mail, hand-delivery, or fax. While parties may e-file using the NLRB’s e-filing system, emailing a Petition to an NLRB Agent does not constitute filing.
• When a union files a petition for a union election, it must serve on the employer a copy of the petition, along with the Board’s description of the new representation case procedures, and a Statement of Position form that identifies issues to be raised at the pre-election hearing. The NLRB Regional Director will serve a Notice of Petition for Election and Notice of Hearing on all parties, likely the same day as the petition was filed. The employer must then file its own Statement of Position form, generally by Noon of the business day before the hearing, identifying the issues it has with the Petition. The petitioner will respond to the issues in the employer’s Statement of Position at the beginning of the hearing. During the hearing, the parties will be limited to litigating only those issues that were raised in their Statements of Position or responses to the other’s Statement. However, NLRB jurisdiction cannot be waived at any point.
• At the same time the employer files its Statement of Position form, the employer must also file a list of prospective voters, with their job classifications, shifts and work locations. Previously, the list of eligible voters did not have to be supplied until after the Regional Director approved an election agreement or directed an election following a hearing.
• The employer must post a Notice of Petition for Election within two business days after being served by the Board. This posting provides more detailed information about the election and voting process to prospective voters.
• Pre-election hearings will generally be scheduled to begin 8 days after the Notice of Hearing is served on the parties. The Regional Director may postpone the hearing for up to 2 business days with a showing of special circumstances, or more if there is a showing of extraordinary circumstances.
• Generally, only those issues necessary to determine whether an election should be held will be heard in the pre-election hearing. Disputes concerning voter eligibility or inclusion, according to the Final Rule, do not have to be decided before the election, and may be heard post-election. This portion of the Final Rule will create uncertainty as to whether an employee is a “supervisor” or simply a leadperson.
• All parties may make a closing argument at the hearing. Written briefs, which were previously commonplace, will be permitted only if the NLRB Regional Director decides they are necessary. However, parties are encouraged to submit written arguments/case citations during the pre-election hearing.
• The employer must submit a final voter list, including phone numbers and e-mail addresses, to the union within two business days of the Regional Director’s approval of an election agreement or decision directing an election.
• Under the old rule, if a party seeks a Request for Review by the Board of a Regional Director’s decision, the election was delayed 25-30 days. The new rule provides that the election will not be stayed after the Regional Director issues a decision and direction of election, unless the Board orders otherwise.
• Post-election, each party may make a single post-election request for review of all pre-election rulings by the Regional Director.
• Post-election hearings on objections to conduct affecting the results of the election generally will begin 21 days after the tally of ballots is issued. Either party has up to 7 days after the tally to file objections.
• Post-election exceptions and requests for review will now be filed directly with the Regional Director, not the Board. The Board may deny review of post-election rulings by the Regional Director.

What is the bottom line? NLRB elections may happen as soon as 15 – 20 days after the Notice of Petition is served on an employer. The time to make sure your employees understand the risks of unionization is prior to receiving the petition.

Even with the hoopla surrounding March Madness there has been equally compelling news regarding college football despite the fact that that sport is not even in season. The National Labor Relations Board’s Chicago office just handed down a decision that Northwestern football players are employees and have the right to organize. Nothing will happen immediately because the case is being appealed. Below are my thoughts on this fascinating development:

The decision is a groundbreaking one and could lead to unionization amongst college athletes and major changes for the NCAA.

The decision was largely based on the amount of control that the football program exercised over the students – i.e., the rigorous practice schedule, mandatory requirements, etc. Basically, the schools are so demanding in what they require of the players that they are effectively acting as employers.

The decision was also based on the fact that the NCAA is a major business and that the players are generating profits for the university like employees generate profits for employers.

The fact that students get full scholarships was enough for the NLRB to conclude that the students are “paid” like an employee.

The next step is an appeal to the NLRB in Washington, DC

The NLRB in DC is likely to uphold the decision because of its political composition (a majority are Obama appointees and pro-labor union)

If the decision is upheld, the NLRB will conduct a secret ballot election.

It’s also possible that the NLRB will order the election to go forward even during the appeal and wait to count the ballots until after the appeal is done.

If a majority of players vote in favor of the Union, the University would be required to engage in collective bargaining negotiations over terms and conditions of employment (which in this case means playing football for the school).

At that point the School can refuse to negotiate, and the case will go the U.S. Court of Appeals in either D.C. or Chicago. The only other appeal after the Court of Appeals is the U.S. Supreme Court, which does not have to take the case.

Northwestern players have said they are not interested in negotiating for money for playing, but I suspect that if this continues down that path some group of players will be. For now, they say they want better medical benefits and a say in how the team is run.

The Regional Director Decision covers Northwestern and the 16 other private Division 1 schools with FBS football programs. In the event football players at a state school (like the University of Maryland, for example) want to form a union, they would have to go through the MD State Labor Board processes. The NLRB decisions are not binding in that forum, but would be looked at for guidance.

The NLRB’s ruling is not controlling on other federal or state entities, but it will be interesting to see if this leads to worker’s compensation coverage for football players.

Currently under IRS Regulations the value of a scholarship is exempt from taxation. Now that the NLRB has found that the scholarship is akin to the payment that makes the players employees, it will be interesting to see if Congress or the IRS changes its view on the exemption for scholarships.

The Board ruling is specific to big time football programs; it will be interesting to see what application it would have if student athletes on non-revenue sports teams (rowing, swimming, etc.) tried to unionize.

Post navigation

About this Blog

The Labor & Employment Report is your one-stop blog to learn about the latest developments in labor and employment law issues. Published by Shawe & Rosenthal LLP, Management’s Workplace Lawyers®, this blog informs human resource professionals, corporate counsel, business leaders, policy makers, journalists, judges, and other attorneys about critical labor and employment issues. The Labor & Employment Report closely tracks new laws and regulations, federal and state court employment/labor decisions, HR trends, and actions from relevant government agencies including the National Labor Relations Board, the Equal Employment Opportunity Commission, and the Department of Labor.

About the Firm

At Shawe Rosenthal LLP, we are proud of our national reputation as Management’s Workplace Lawyers. For more than 60 years, we have been representing management in the most complex labor law and employment matters. Our tenacious, results-oriented approach produces results in the courtroom, respect in agency proceedings and sound proactive guidance on workplace policy.Read More